Happy Days Are Here Again…..
July 19th, 2008 Categories: National and Local Real Estate Appreciation Forecast
Constantly all one hears or reads today is what is wrong with real estate.
Sales, mortgages, lenders, brokers, inventory have all had their share of headlines.
BUT the numbers show a different story.
A recent article in Barrons (July 14, 2008) entitled “Bottom’s Up: This Real-Estate Rout May Be Short Lived” by Jonathan R. Laing suggests that the pessimism that one read in the papers or hears on the news is overdone based on recent data.
Mr. Laing notes that sales of existing homes are showing tentative signs of increasing while the plunge in prices likely is nearing an end and inventories are getting smaller.
The chart below concurs with Mr. Laing’s observation that the “rout” may be over. Real estate has turned the corner for most parts of the United States. California is about ready to take off.
Properties in San Luis Obispo, Santa Maria, Santa Barbara, Ventura, Santa Paula will have significant appreciation over the next 36 months. 26% to 36% growth in 36 months is excellent growth. It does not get any better.
The areas just mentioned will experience a 7%+ annual growth over the next 12 months. Where can you get 7% on your money today? Banks? No! The stock market? Maybe. Commodities? Watch out.
It is readily apparent that all areas of California will be headed upward and will be a good investment. My God, look at San Diego, Chico, Redding and yes, San Bernardino. All are showing growth.
Hawaii will not share in this upswing. They have other “island type” problems that the rest of the United States doesn’t face (tourism is their major business. Travel will be difficult for the immediate time and unless a “fuel cure” is found instantly travel will be minimized by people for a significant period. Therefore Hawaii will suffer).
California has turned the corner. So the continued negative media coverage of real estate is mystifying. I guess that old adage “negative news sells” is alive and well.
Prices are at a point now that young people can afford to purchase a home.
Over the next 36 months, especially along the coast line, property values are going upward (some will say prices are crazy).
This is not a crystal ball assessment but a statistical evaluation of what is projected based on current economic, jobs, and federal figures collected from across the United States.
In a recent article “66 Cities Where Buying Makes Sense”, dated July 15, 2008 by Marilyn Lewis, MSN Real Estate, lists a number of cities that she thinks that if somebody wants to buy a home, these are the areas that make sense.
Her recommendations include Edinburg and a number of other cities in Texas; New Orleans, LA; Tulsa, OK; Detroit, MI and yes a number of areas in Florida.
Ms. Lewis also notes that despite the drop in home prices, long-term buyers in the top 20 U.S. metro markets have seen their property appreciate by 70% since the year 2000. Over an 8 year period that is an annual appreciation rate of 8.75% each year for 8 years. That is great when compared to the National average of 7.0%.
All the negative news about mortgage lenders, real estate sales, inventories in a few weeks will have all but disappeared.
Within the next year we will start hearing the chorus that homes are not affordable and the cycle begins again.
If buyers who have been waiting for the bottom have not acted by now, well they have just missed the train. As shown in the article: http://www.venturacountyretalk.com/2008/05/05/it-only-gets-better-we-are-on-the-upsidea-historical-perspective-of-home-prices-in-ventura-county-and-what-can-be-expected-in-the-next-10-years/ the California real estate market is going to be great.
Up……Anyone?
Your comments are welcomed.
